China, Hong Kong stocks extend gains on expectations coronavirus outbreak will be contained
- Stocks tied to medicines able to treat coronavirus soar by daily limit in mainland
- Cathay shoots up 2.7 per cent on plan to cut flights to mainland, mandate unpaid staff leave
China and Hong Kong stocks extended gains, as traders bet the coronavirus epidemic that broke out in Hubei province will be contained.
Even as the death toll of the virus approached 500 people, the Shanghai Composite rose 1.3 per cent to 2,818.09 on Wednesday, following a 1.3 per cent rally a day earlier. The ChiNext gauge of smaller companies surged 3 per cent, taking it to within only 2.7 per cent short of a high in January preceding the Lunar New Year holiday.
Hong Kong’s Hang Seng Index also advanced, rising 0.4 per cent to 26,786.74. It was its fourth consecutive session with gains.
Equities got a boost from the overnight news that China has found two remedies among existing medicines that experimental results showed are effective in containing the replication of the coronavirus. The two medicines are arbido, a drug for colds, and darunavir, a treatment for human immunodeficiency virus, according to the findings by Li Lanjuan, a member of the senior expert panel on the National Health Commission.
Investors including HSBC Jintrust Fund Management and Western Asset say the big sell-off spurred by the virus might be a one-off and its damage to economic growth would probably be short-lived. To cushion a possible slowdown and avert a liquidity crunch, the People’s Bank of China has injected billions of yuan into the financial system this week.